The Dominican Republic, long before being officially named, has always been eminently a livestock farming nation. As soon as the alluvium gold ran out, alongside the Indians and long before the sugar industry flourished by 1527 and also when chimneys went dark towards 1580, livestock-farming was already taking effect in the Hispaniola prairies. The first cow to arrive to the American Continent came in Columbus’ second voyage in 1493, thus incepting the presence of this Spanish long-horned breed all throughout our geography, which originated the Dominican Creole cow, an animal fully adapted to our environment.
In 1966, Pasteurizadora Rica was established and further on Cooperativa Quisqueya (COQUEYA) in 1967. For a significant amount of time, being a livestock farmer was a symbol of distinction in the community. For most of its life as a Republic, the production of dairy in the country was enough to cover the national demand. This balance collapsed by ends of the 1970s after donations of powdered milk were introduced inland through Public Law 480, which contributed to changing the preference pattern of consumers. However, it was the one-sided liberalization in 1990 and the enforcing of the WTO in 1994, the inflection points which skyrocketed the powdered milk imports. This imports, highly subsidized in their countries of origin, would slowly become cheap raw material for the industry, but mainly, easily accessible, manageable, stored, and bought with credit facilities, which made it more attractive in replacing freshly produced national dairy.
This way, and with government clearance, powdered milk began to be used instead of fresh milk for the production of liquid milk (rehydrated) and of cheese as well. Livestock farming is one of the most intense economic activities. The reading public must know that birthing cows need to be milked every day of the year, including December 24th and Christmas Day, December 21st and New Year’s Day, which makes it an activity with no holiday breaks.
In the last two decades, two phenomena have affected dairy production, provoking its stagnation and the disappearance of many dairy farms. This has been the result of two combined effects which have struck hard, thus affecting the economic activity. On one end, it has been the increase in powdered milk imports, butter milk and byproducts, many of them are used within the industry to replace the national commodity. Currently the country imports USD$120-150million per annum (approximately RD$5,700 billion, which could be well produced inland, what would translate to wealth and jobs in the country. The market power, result from the opportunity to access other commodities in the international market, has caused for industries to have absolute control on dairy pricing, able to maintain it under frozen status or even depressed.
On the other end, sundries for livestock production (concentrated foods, medications, grazing seeds, fertilizers, wires, dairy farming equipment, etc.) have increased significantly as years pass, which adding the uncontrolled increase of combustibles and electricity (essential to maintain up to par livestock farming and cooling of dairy), have skyrocketed costs for livestock production.
Both combined phenomena, have caused for a decrease in profits within the livestock farming sector, all the way till attaining the virtual disappearance of the activity in important regions, other producers such as Central Cibao, Monte Plata and most recently Baní. The traditional East has survived in their practice because of the pasturing system, and because they don’t maintain a culture for dairy cooling, which thus causes, a diminishing in quality of the product.
Within the industry per se, for decades the predominance of the Rica brand was well noticed in the market, Rica has dominated the liquefied milk market share and also the inland dairy politics. Several brands have attempted to dispute the market unsuccessfully. In the 1990s, with aim of recovering a state project which had been shut down, this project was given to a group of livestock farmers, thus reaching the internationally renowned Parmalat, an Italian-based company which market share in 30 countries.
For several reasons this company still does not surpass their 10% inland market share. Another company with rose with much solidity was Lácteos Dominicanos (LADOM), but since the beginning based their production on rehydration and not in the purchasing of fresh dairy within the local market, which led to an open war with producers (an issue the industry took advantage of), which adding certain incidents with the School Breakfast, caused for this company to enter in dire straits. I am unaware of their current situation.
Evaporated milk has been historically dominated by the companies CODAL or Nestlé Dominicana, which is located in San Francisco de Macorís, and purchases from over 1,200 small-sized farmers, especially from the Northwestern region, the deep South and the Northeast. In the last two or three years some companies have debut in the production or importation of this product. Currently, there is a controversy with respects to these brands complying with labeling norms, due to the assumption that only CODAL own an evaporator in the country.
In the cheese area, though Sigma Foods currently holds the dominant market share, before them Sosúa, there are other medium-sized brands worthy of important mention, such as Geo, San Juan, Michel, Induveca, Cambre, El Banilejo, Oleaga, among others. The vast industry is organized within the schematic of the Dominican Association of Dairy Industries (*in Spanish Asociación Dominicana de Industrias Lácteas), ADIL. Currently within the country there are 700 small and medium-sized processing facilities for cheese, yogurt or pastries, distributed nationwide, which do not pertain to ADIL. Together, they absorb other 50% of the dairy produced in the country and continue to grow. Large-sized pasteurization plants, however, only consume 16% of the national dairy production, a tendency that continues to decrease.
Despite the fact that the demand has increased, and plants continue to expand, the demand for national commodities has decreased inexplicably. Recently, a controversy has taken effect regarding the importation of milk from Puerto Rico, on behalf of one of the largest pasteurization facilities in the country. It is brought via Ferry, the equivalent of one million liters of fresh milk, which is the result of a remnant from the neighbor island. It is credited to the scarcity of milk as a result of drought. This situation has caused a conflict between this company and farmers.
It is true that in all dry seasons, the production of dairy diminishes in all the countries where it is produced, however, the decrease in production in the Dominican Republic, 18% in the last three years, has been the result essentially from the lack of profitability, already explained in this article. The importations tend thus to strengthen the vicious circle which stagnates the production, given that since it is imported, it is not produced, but it is not produced because it is imported.
A public and tearing conflict would be the least convenient for the involved parties. What I propose is wide scope agreement among the main stakeholders of the dairy chain, which involves producers, large-sized processors as well as small-sized ones, and the State authorities in order to achieve dairy self-sufficiency.
Induveca is a company in the Food and Beverage portfolio of assets managed by VICINI.
The VICINI family has invested in different economic sectors in the Dominican Republic for over 140 years. VICINI is one of the companies that has contributed significantly to the development and industrialization of the country.
SOURCE: Revista Productor Agropecuario